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The Fair Labor Standards Act (FLSA) is making headlines in 2025 with sweeping legal shifts, regulatory updates, and proposed reforms that directly affect overtime eligibility, wage protections, and exemptions. Whether you’re an employee or employer, it’s vital to understand how these changes may impact you in real time.
Table of Contents
Courts Freeze Overtime Threshold Increases
In 2024, the Department of Labor announced a two-phase increase in salary thresholds for exempt employees—from $684/week to $844/week on July 1, 2024, with a planned jump to $1,128/week on January 1, 2025. However, in late 2024, federal courts in Texas invalidated this rule, returning thresholds to the 2019 level of $684/week. This decision means many employees who briefly fell above $844/week are now again eligible for overtime.
Subsequent district courts confirmed the outcome: the 2019 standard remains the law for 2025 unless overturned by appellate courts.
DOL Appeals and Policy Revisions
The Department of Labor has appealed to the Fifth Circuit, challenging the freeze of the updated thresholds. The agency’s new leadership, appointed in January 2025, is reviewing whether to continue defending the vacated rule or rethink its strategy. Legal observers expect a Fifth Circuit decision by late 2025, which could reinstate the higher salary levels if favorable.
Supreme Court Lowers Employer Burden in FLSA Disputes
On January 15, 2025, the Supreme Court ruled unanimously in E.M.D. Sales, Inc. v. Carrera that employers defending exemption claims only need to meet the “preponderance of evidence” standard—easier than the previous “clear and convincing” standard. This shift simplifies defenses in wage-and-hour litigation, ultimately benefiting employers in future disputes.
Key Updates Summary
| Area | Status as of July 2025 |
|---|---|
| Salary Threshold | Reverted to $684/week (2019 level) |
| Fifth Circuit Appeal | Decision expected late 2025 |
| Burden of Proof | Now preponderance of evidence |
| Sub-minimum Wage (14c) | Phase-out proposal under review |
What Workers & Employers Should Know
For Employees:
- Workers earning between $684 and $844/week regained overtime eligibility.
- Keep monitoring the Fifth Circuit ruling—it could restore higher thresholds.
- Take note of wage-and-hour rights and changes to disability wage protections.
For Employers and HR:
- Immediately audit exempt vs. nonexempt roles and adjust payroll accordingly.
- Prepare for possible reinstatement of higher thresholds in late 2025.
- Leverage the lower evidentiary standard for exemption disputes in litigation.
What’s Coming Next Under FLSA
- Fifth Circuit Ruling – Potentially reinstates salary thresholds before year-end.
- Phase-Out of 14(c) – May eliminate sub-minimum wage for workers with disabilities.
- New Legislation – Proposals targeting tipped workers, independent contractors, and overtime rules could emerge.
- Further Court Challenges – The Supreme Court might revisit FLSA decisions depending on appellate outcomes.
Key Point Recap
- Salary thresholds are back to $684/week for now.
- A Fifth Circuit decision in late 2025 could change standards again.
- Employers face a lighter evidentiary burden in exemption cases.
- Proposed reforms target disability wage rules and worker classifications.
Conclusion
The Fair Labor Standards Act remains a dynamic area of U.S. labor law in 2025. Legal rulings have reversed wage thresholds and eased burdens for employers, but upcoming appellate decisions and regulatory reforms may shift the balance again. Staying proactive—through classification audits and awareness of new rulings—will help protect both workers and organizations.
Take the time to review your payroll classifications, track upcoming legal decisions, and stay informed—because FLSA changes are unfolding rapidly and could impact your rights and obligations.